[Click eStock] "CJ Daehan Tongun, Parcel Delivery Growth to Continue Next Year"

4Q Operating Profit 98.4 Billion KRW... Expected 2.9% Decrease YoY
Parcel Delivery Growth Offset by Weak Contract Logistics and Construction Sectors
Parcel Delivery Growth Anticipated Next Year... Potential for Performance Improvement

[Asia Economy Reporter Minwoo Lee] CJ Logistics' operating profit is expected to decrease by 2.9% compared to the same period last year. Although the parcel delivery segment grew, the contract logistics (CL) and construction segments showed some weakness. However, with parcel delivery price increases anticipated next year, there is analysis suggesting possible performance improvement.

On the 17th, Eugene Investment & Securities forecast that CJ Logistics will record consolidated sales of 2.9996 trillion KRW and operating profit of 98.4 billion KRW in the fourth quarter of this year. Sales are expected to increase by 6.0% year-on-year, while operating profit is expected to decrease by 2.9%. The parcel delivery and global segments saw operating profit growth compared to the same period last year, but the CL and construction segments declined, leading to an overall decrease in operating profit. The CL segment's operating profit is estimated at 27 billion KRW, down 7% year-on-year. The construction segment is expected to fall sharply by 58.3% to 5 billion KRW.

The parcel delivery segment showed solid growth. It is expected to generate 855.1 billion KRW in the fourth quarter, a 23.9% increase year-on-year. Operating profit is forecasted at 42.8 billion KRW, up 29.7% compared to the same period last year. Minjin Bang, a researcher at Eugene Investment & Securities, explained, "Compared to the fourth quarter of last year, parcel volume has maintained a solid growth rate of about 25%, but the average price is expected to decline by about 2% year-on-year due to mix effects. The trunk line cost issue, which had impacted parcel margins in the previous quarter, appears to have stabilized."

This growth trend is expected to continue. Researcher Bang stated, "Although the base has risen, due to changes in consumption patterns, parcel volume growth is expected to remain valid next year, and if parcel price increases succeed, another profit momentum is anticipated. There is also a social consensus forming that price increases are inevitable to raise fees for improving parcel delivery workers' treatment."

The global segment is also expected to continue its recovery. There is room for further improvement in overseas subsidiaries that already turned profitable last quarter, and forwarding volume is expected to increase due to recent sharp rises in air freight rates.

Against this backdrop, Eugene Investment & Securities maintained a 'Buy' investment rating and a target price of 210,000 KRW for CJ Logistics. The closing price the previous day was 161,500 KRW.

This content was produced with the assistance of AI translation services.